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There've been several movements out there, with some success, who desire to completely untax income and property (ie the various sales tax movements).
Fuck Them.
Let's completely untax wages, all the way down the chain.
First, let's look at the payroll tax. I'ts 15.3% total on the first $90K or so. It only applies to wages. Most families pay more to this than they do the income tax. It raises the price of labor - which means, all else being equal, producers (employers) would rather substitute capital for labor (automation), cheap labor for expensive labor (skilled v. unskilled, domestic v. foreign), or not produce at all (going out of business).
Then we look at the income tax, the lower brackets act as a tax on wages: as we find other sorts of tax revenue, lets keep the top rate at 33% or so, and steadily increase the personal exemption, so that one day we have an income tax of 33% on income over $250,000.
So, if we eliminate the payroll tax, and increase the personal exemption, labor will become 20-30% cheaper in the US. Cutting the rate by 25% means that at least 5-7% more people are employed right? Something like that anyway. That pretty much takes care of unemployment, which reduces the amount we have to spend on welfare, medicare, public safety, etc. etc. Now, with near zero unemployment, employers have to recruit employees, rather than employees competing for jobs. Wages and working conditions go up. They go up nearly as much as the wage taxes go down.
So, what can we tax then, if not the wages of our working population? Investment? It's not quite that simple. Some of that investment is worthwhile: the guy who lends you the money to buy the shop, or the machine, or the tractor, or the network; that's good investment. We don't want to discourage that - plus, if you'll note, when you buy a machine, that's evidence of increased demand for machines - which means that down the chain somewhere, a guy gets hired to mine the ore for that machine, refine the ore for that machine, move those raw materials to a factory, work in that factory, deliver that machine to the dealer, sell that machine, and service that machine. Plus all the guys needed to feed, clothe, house, and entertain the first set of guys.
What about taxing wealth? That's got the same pitfalls as taxing the capital in the above paragraph. If i buy a 4,000 s.f. house, a bunch of people get employment in the process of building that house. Same with fancy cars, gourmet foods, and expensive toys.
What's left? Plenty. Mostly, land. If I buy $1,000,000 worth of land, that doesn't signal some corporation to crank the production of land, does it? No one down the chain is employed creating it. All it does is fatten the pockets of the last guy to own it, so on and so forth, past the Europeans killing the natives for it, back till the first guy bashed the second guy to show up. So taxing land doesn't reduce the production of it. Heck, most of that $1,000,000 value is due to public spending on roads, transit, police, fire, and schools.
Does taxing land make buying land more expensive? No. Just the opposite, really. First, the guy selling it today gets exactly what people think it is worth, and can afford: what the market will bear. Putting a tax on it doesn't improve people's ability to afford it, it doesn't increase what the market will bear, so it doesn't increase the price. In fact, because the ownership of that land bears a greater cost, through the increased taxes, people will calculate that it is in fact, worth less than it was before. They'll capitalize the future tax payments and subtract that from the present value. And, because land has a higher carrying cost, fewer 'investors' will see the profit from merely holding land (or barely covering land with some taxpaying enterprise like a parking lot, or an urban 'taxpayer'). These guys will be forced to build, or sell to someone who will build, at least in urban areas. So more lots become available, reducing purchase prices in the local area.
What about aunt sally, on retirement, who owns her home outright, but is on fixed income? Well, first, the same thing that always happens when property taxes go up - they exempt seniors. Second, all the aunt sallies and the brother jimmies and the joe sixpacks of the country own only a small fraction of the land values. Most of the real valuable land is owned by corporations, which are in turn owned by a relatively few wealthy people. In other words, the distribution of land wealth is even more skewed than the distribution of income. A property tax on land wealth is inherently a progressive tax. it could be made more so by exempting a small amount per household - though this really is only a tax on renters.
What else besides land? Broadcast rights, Water rights, Timber rights, oil righs, mineral rights, utility monopoly rights, limited competition licenses (taxi, fishing, etc.), de facto pollution rights, and even patents.
How much can this generate? Hard to say. At full collection - and property taxes generally fall to the states, maybe 4-5 Trillion. However, untaxing labor and productive investment would increase land values - probably for another 3-4 trillion. Full collection isn't likely, or even warranted off the bat - it would be disruptive to say the least. But incrementally, it could begin to offset other, more harmful taxes.
What's the first step? Get your local or state government to change your property tax, such that the rate on land is higher than the rate on buildings. Generally, a good first step is changing the rate such that 50% of the revenue comes from land values, instead of the 20-40% that most places collect. Generally, a 1% property tax would change to a 1.67% tax on land values, and a 0.7% tax on building values. Most taxing athorities already assess these values separately.
What's this do? First, it generally reduces the tax on 70% of homeowners. It encourages absentee landlords to improve their properties, or to sell them, increasing homeownership. Most of the shifted revenue falls on the owners of valuable commercial properties, corner lots on the main road and the like. Most of these property owners then lease the land to businesses. Economists state that the increase in land taxes cannot effectively be passed on to the tenant - for the same reasons that they don't increase land prices.
Then what? Try and shift a bit more of the property tax, and then start reducing other taxes and shifting their revenues to the land-only property tax. Make improvements to the community: better schools, transit, etc. - they raise the property values. Once the land tax is high enough, they more than pay for themselves.
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